After a failed attempt to break above the previous double bottom chart formation, CAD/JPY is forming another reversal pattern on its 4-hour time frame. This time a triple bottom can be seen after the pair bounced off the 91.00 major psychological support.
With that, the neckline is still around the 94.00 mark and an upside break might mean a rally of at least 300 pips, which is the height of the chart pattern. This could take the pair back up to the 97.00 resistance level or the top of the uptrend around 99.00.
Stochastic is already in the overbought zone though, indicating that Loonie buyers are getting exhausted. This might lead to a quick pullback before buyers gather enough momentum for an upside break.
By Kate Curtis from Trader’s Way